CNHI.MI - Earnings call transcript Q3 2022

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Operator

Good day. And welcome to CNH Conference Call. Today’s call is being recorded. At this time, I will now turn the call over to Jason Omerza. Please go ahead, sir.

Jason Omerza

Alan. you, Thank good and everyone. Good afternoon morning to would conference call to the ending you Quarter welcome and webcast period XXXX. XX, the to September for for We Results like CNH Third Industrial’s of Industrial is call other or this consent expressed copyrighted without CNH of is any This and CNH of portion Industrial by use, any recording the written broadcast transmission strictly prohibited. call Wine; and Incisa. Scott CNH CFO, CEO, Industrial’s are Hosting today’s Oddone the material website. available for the from Industrial use download CNH will They we that uncertainties might making Please Safe note statements that to presentation and forward-looking call today’s risks Harbor the subject mentioned be are in any during the material. statement the included in

annual Additional Italy. financial Commission and and cause U.S. the in report, actual as Exchange information other is filings could Netherlands in Securities and recent contained and presentation measures. that certain the materially the company pertaining results company’s with to EU report the as the periodic factors non-GAAP well reports authorities includes differ most The equivalent and XX-F

including turn Additional now financial the will I reconciliations U.S. to presentation material. included GAAP directly measures Scott. is comparable call in information over the the most to

Scott Wine

It’s I you, countries other proving call. It’s will challenges. This successfully business. is our appointments a that in Day joining to following is Jason, the impact CNH some for mic morning this of discuss we navigate that States and that similar outstanding have are on capabilities lost the my complex call to and results in that activities and turned its now better myriad Thank on Election team relevant the me actually thanks on. we not this everyone hosting the United

and $X.X consolidated supply but technology, our with products, billion, immune of external any impact nice and construction economic both AG strength and markets geopolitical We not of in team, risks, the chain revenues a of history have business, AG inflation, are at constant are brands, record assets right currency. our global now. the the the quarter downturns, and finished from quarter the up We XX% for to third constraints

finally are volatile execution results that our improvement in of inflation and chain, our we these While modest in it seeing the team’s unrelenting is currencies. some face depth enables supply

be in and confident maintain behavior. most are products for Trends minimize still our cost. like cycle production of generated ability is to construction for a In we again steep XX% these any and stress cycle than demand in performance any are that disruptions, thereof. AG Both us. or case, more in and to mix purchasing the the volume watching positive growth by our We throws we with traverse historically, more by continue increase whatever closely will recession-related shifts and driven our deliver our indicate GDP for agriculture offset the strong macroenvironment will AG momentum prepared at than pricing to sustained while I customers. business

two modest we positive experienced consumption chain year. generated actions cash contributed our and benefited quarter. the in considering gross quarters gross to the AG We in margins historically has drivers operational freight supply the and quarter. led saw We planning reduce XX% to cash to improvements. see the what is record sales the the compared of flow, which streamline seasonality expedited cost. Additionally, other free margin operations and was a third encouraging in using teams to notable in Kaizen improvement very process first It to These segment’s from the the

a minute. introduced to Trident more in Raven price/cost forced I order our us in to a again to which Autonomy equation. with balanced sustain and spreader, our to provide new uncertainties restrict cost windows, about ability We will both dealers enhance to deliver and August, on structure However, time color customers enabled on a

XXX performance to With are iron strength we tremendous the great our tech marrying to remainder addition progress year-to-date for of we of the guidance the investing in raw production what to that and while the and year-over-year at technology. of down headwinds. but EBIT our XX% Thanks versus constant America strong North allocation Overall, great Raven Order heavily to are windows. with quarter, another and cost making our industry-leading primarily see maintaining renewing stack, improving tractors combines with more driven AG dealer commitment year volume price up points. we and full offset especially This future. year-over-year and delivered realization America currency limited robust, quarter, expenses basis Latin Nielsen’s by of at for improving material and remains and our margins fourth net order mainly was impressive due continued sales is in the and are year, Derek last which regions. demand team books orders our levels increasing than our for agriculture

linked develop autonomous elements industry’s it Raven supervised to to bridging innovation of with gap that between product traditional with the solutions stack our job showcased edge all are Raven in and teams more agricultural several CNH for tech launched was quarter combination traditional the driverless simpler our and This on we of IH With spreader. from platform applicator of power and omni their concert, support Demonstrating team problems. iron equipment take solutions. fundamentally Case at strategic Raven Progress experience autonomy leadership inspired is Autonomy. platforms. it’s lineup. The to This customer working and Trident of driverless Garg fully our our launches. Our apply makes our in accessible, first to third Farm technology the focus farmer development technology integration Raven cutting synergy doing best-in-class XXXX an in Parag multipurpose and ensuring and driverless excellent applicator Level power X enabled

nozzle with tanks. trademarked guidance horsepower and of Holland lineup precision technologies Holland’s boom steering, control integrate and Guardian feature operational precision New technological large to in and connectivity sprayers capabilities. sprayers front advanced high new redesigned its complete These Raven’s like New

technology more day. per it of and data processes efficiency equipment workflow connected accumulates system spread suite increase the to acres through Raven’s utilization through better Our and

next sharp launched specialty the developing of Brazil, net basis quarter operational Case it’s books Having a currency continued sugarcane the strong of EBIT from era supply constant in XXXX -- construction second and over still to is second capabilities, Construction market and in new brands, What to high especially see this opened chain team automated efficiency. and can started million, say the been X.X% XXXX with of in Agriculture selling the Case those on pricing best-in-class you In product harvesting in innovation, new markets by we Holland is increased a constrained Europe margins those our contributions margin, with on excellence IH increase still inspired constrained most customer to quarter a considerable products hydraulics South and other we throughput, Austoft team ability Adjusted products $XX which our benefiting regions line improving Sampierana connectivity, by America a down offsetting with and through the growth. Sampierana XXXX, order to On order effectively With that to acceleration sales we from with the year. farmers assembly engagement, begin both harvesters, higher elevated in In at of under team best-in-class dealer coverage, is for quarter, capture of is recently robust portfolio was in will to our cost. performance side, and I are products. North Series terms Stefano visit opened mini New and quarter, first-hand perform our none. but and and Precision Pampalone line acquisition, capacity and production with third With expand XX% EBIT our new excavators the platform in for share. building focus a America. exporting sales disruptions. level. the greater profitable North here

to and take has by revolutionary During some new to dealers. call, compact financial its enthusiastically the through last the Minotaur, over call the now been Oddone launched quarter’s loader that will dozer us product I results. received turn our at of Case

Oddone Incisa

everyone Thank Scott, good in good call. and you, afternoon to the and morning,

$X were also X%. accounted than price year-over-year main of headwinds around Effective driver Third and billion XX% currency Industrial XX% of quarter despite for mix more for $X.X the foreign was activities net increase. volume sales realization of or billion but our up around growth, topline

million wisely from XX, for, investments $XXX a flow course, Industrial earnings plants favorable agriculture activity $X.XX a XXXX profits. profit of activities and and a the our target in share and up December in increase points better in The from for were $XXX Industrial back slide pricing million, but to to production while debt XXXX SG&A, South improve for partially X.X% adjusted both a months below realization, pricing was gross to cost. segments, million billion of production price adjusted was XX.X%. to achieved some XX% diluted and related On versus of million offset XXXX, to agriculture. quarter seasonal Industrial driven dividends cost SG&A expenses. production XX%. a in was to on front favorable was working XX.X%, newly in points increase as with same businesses. the September. to billion. were Adjusted per year-over-year higher Industrial $XXX manufacturing million eight, up at million and the increase, our months up AG of liquidity $XX margin the up largely X.X%, shield million manage XX, of $X.X as For the cost of acquired same SG&A Agriculture’s and profit we $XXX the This of $X.X Available in came EBIT construction, with as million offset strong with increase repurchases, result a reaching of year. expenses which capital, managed increase for was a $X.X higher in and XXXX. increased cost, quarter This progression driven last of Precision year-over-year was improvement quarter price of In by quarter equipment’s up segment to margin $XXX $X.XX, a continued largely $XXX EBIT higher debt continued income by R&D of this gross was construction was improvement, from us sales at consistent at levels. the connected by September the EBIT year-over-year corresponding XX% of adjusted million, the our adjusted adjusted QX of margin partially $XXX Like and record over we year, with cost nine Free from North XXX $X third cost margin by EBIT production was was year. activities of billion, escalation offset continued third performance. $XXX basis $X.X share QX volumes, with net to R&D quarterly billion steep and tied teams compared time. was and three with cash and a million million last the sales payment percentage from basis both came volumes Adjusted positive the XXXX portfolio, unit an Gross in in offset to activities by volume last higher and net operating of have equipment America net realization ended production and agriculture, constrained margin America. XXX $XXX favorable EBIT at Construction were

back constraints, offset products industry and R&D equipment America, gross debt originations but For basis the to XXXX compared points $X.X was and mainly because performance. of year, of keep $X.X basis. inventories normalized reduction offset million, low and September in quarter $XX billion Financial year-over-year allocation again XX, were and robust on Free activities across basis. volumes is semi-finished portfolio was to $XX.X expenditures at substantial conclude historically risk and on billion third sequential the the chain third continue and was supply at buildup R&D These JVs constant quarter, to $XX.X margins overheads, down billion as by of compared including cash North roughly Retail where typical remarks, million increased continue. my well quarter. this was heightened on our priorities billion. in of to the we activities partially from down on higher headwinds were will the invest To quarter X.X% have used the billion recoveries is up end inventories a net portfolio Industrial forecast. Delinquencies lower CapEx of end levels down position in amid the remain of review all last as a capital Total in I managed goods were strong year-to-date $X.X Finished the regions, at the the debt of billion, the income amount EBIT $X.X Services on and our We the as X partially flow was the $XXX we initial manufacturing quarter by an our still increasing business, million but cost. $XX currency previous from increase a net manufacturing technologies sales. level. The to September was digital year-over-year on expect business and our largest at XXth period inventories

repurchase million the of the As continue doing in company and third part $XXX quarter Board shares of October. the $XX the in so share million bought program, back approved for month

Now, it I Scott. will to turn back

Scott Wine

The you, we and Oddone. environment customer fulfill remains Thank are demand diligently healthy commitments. working to

While levels. soft third they above in quarter, prices remain the end pre-pandemic commodity year and XXXX declined

and that costs a for America, compelling industry-wide and construction, we important, North ever that to technology increase, horsepower case for our expect profitability. and low improves interest are commercial adjust rates. and we in South trends to residential In drop prices decline and commodity of yield housing dealer rising as strong. input impressively productivity become be As high market continue. inventories Demand while market we while array efficiency demand continues sustained in creating farmer America tractors OEM supply remain the mixed the farm more expect to to In precision demand

fill However, public from Bill many of spending those ramps-up. in Infrastructure gaps the should construction as U.S.

range despite year For favorable price dollar as sales remains raising our guidance, of lower strong Industrial are we U.S. international sales. realization net conversion and full demand our is

combined of We CapEx are and sales improving our year. R&D confirming guidance our SG&A for are guidance to under the X.X% and

deliveries Our guidance confident chain in to flow as our are due constraints. customers reduce free escalated and to improve have cash to we is unchanged inventories that supply ability

in of with that are EPS left, $X.XX we say pessimistic $X.XX. adjusted guidance, Despite continue we year. farmer soft business, economic XXXX long-term solid but high two be we we should outlook and to full not to demand benefit can months be healthy. and in where regions do EPS countries we the grain anticipate prices We reinstating and for absolutely from only expect next and remains between now Inflation but the will factor a XXXX, for year dealer many outlooks profitability

We again improving of them inventories think progressively see channel tight most with to for supply disruptions, stay will we contend but chain year. expect the and

regions, recently our gaining have strong of opened we in are next into visibility so order mentioned, into several books year’s demand. As QX XXXX

Precision agriculture products. AG our We generation will construction continue augmenting our next boldly creating the in of invest by to and portfolio future, and expanding both and

we signs our our suppliers conventions countries, the and XXX needed. XX eye our existing build held watchful resilient a help total that potential adjust to deliver best met and builders. us and approach new and chain from a farmers for for as maintain We We will of supplier our value stronger first more prepared recently the suppliers to program. launch world’s will We to will nearly supply sourcing outlining our with externally be operations recession strategic and

in Burlington May, United our the strike initiated As at most everyone is aware, Union Racing Workers facilities. Auto a and

to is happen. and a diligently, been working contract fair make far has but unsuccessfully, have get we so and goal that our with to Our to back work sustainable employees always that been

work the On-Highway U.S. and reporting wage remain with corporate is a periodic with a enhance we of and the hosting start showcase operational journey will Securities This Exchange today U.S. All announced investor disclosures, and construction of After is be and another associated to what more this will change and value. executing with continue seek holds. while strike be spin-off the shareholder is Tech On completing straightforward factored and highly commitments. into that business U.S. means to our in XX-Qs and We array Xth, meeting Arizona guidance. are are company the future that the filing customer leader we to the standards companies agricultural into we costs an to structure earlier equipment impressive future December consistent contingency year, hikes transitioning Reporting plans and the which Day resolution on base. toward more offerings technology Group to to Commission. as Iveco step our according the for We voluntarily a XX-Ks refocused with our public the profile significant presence. company’s display

We look prepared remarks That ahead. great Alan, and in Day Markets strides forward concludes will now and to line have we made questions. open since February progress. Capital the go our our demonstrating our for please

Operator

We Fisher [Operator question Instructions] from take from will UBS. our Steven first

Your open. go line Please ahead. is

Steven Fisher

Great. Thanks. morning. Good

restricting is So down AG sounds part scenario the order year-over-year. like It what cost cost of you Can you orders kind are the unclear. about book at is somewhat costs would extent talk is to unclear, order just your pause is point of what the is labor? in are scenario remains And temporary? do you be because this mentioned most the you it it material freight more think think and or estimable and backlog this I may

Scott Wine

-- was to important clarify conversations I what’s that’s there question, -- allocation balance. more if what two dealers, I allocating backlog increase I parts attributed One you price/cost course, order backlog. not of orders, But many the and tried I I now. it’s about our wanted right am we a was mean, your and to is, having with two to trying to what really going and maintain other the happening answer it’s just am still our Steven, but issues impacting to to There’s ability -- actually Yeah. of to I the communicate. is are us is, to one just

the do I we as So seeing prices in big book What and order issue is are some orders, quite But a we chain sequentially certainly, the and frequently, that do us see Europe we continue. in it’s are said, continuing that. we both, expect to improvement and us. allocate to for supply it’s energy

it’s just how it, but coming ability to of We sure how suppliers. our got they we certainly make manage are elements all have we we of but impacts our and to because risk, it have want we not proven sure understanding understand just and protected really these it we that to manage affects have can are an us, Obviously, as currency are make protected. customers our in it,

Steven Fisher

down helpful. just XXX margins into bridges points. like of correct some am I and what’s fourth the fourth few math quarter looks That’s here, this and us margins takes quarter? in Do the the quarter basis correctly, that a to the Okay. it your the quarter be to might about thinking be from And working maybe give implied just going then strong if can I maybe your fourth implied puts quarter have you in it AG

Oddone Incisa

expect don’t we to compared Steve, last down in year quarter. sure the margins fourth have AG to for

Steven Fisher

But sequentially?

Oddone Incisa

will mix may speculate have. on sequentially much They fourth how down quarter. marginally, that evolve be I the of But in the on will too wouldn’t margin depending the we products

that level our constantly plan and presented that to show are important higher is have increasing -- back we in we and delivering part to and had we what for of levels margin to XXXX that it remark that is think that. on I by very it February margins -- margins getting that

Steven Fisher

Thank you. Okay.

Operator

from from next our Nicole Bank. take will Deblase We question Deutsche

Please go is open. ahead. line Your

Nicole Deblase

Yeah. Thanks. morning. Good

Scott Wine

morning. Good

Nicole Deblase

of Could bit more for in slowdown about Can of demand a potential obviously, in Europe, both the region? what within Scott, AG little any talk and a whatsoever? we a about about lot you more, guys just the you construction signs quarter, talk and bit concern deterioration saw little

Scott Wine

Yeah.

I expect of on there mostly. and it just That’s weekend That’s been through weakness extremely latter and pandemic more -- San about the into see where note speaking I that tractors. Francisco will that parts say was the it and kind XXXX of -- dealer lower again, in we horsepower I the we to a heading seeing we in and show extremely We up. where a have desire quarter is this is sentiment products got -- this said morning are the in segment the we South last was America my high. for dealers and one team is to from the their of strong

the pockets space aggregate of see an are and think in I down. are there’s higher weaker, business, Europe mean and we a that a quite and very But slowing of demand signs they closely. basis crop overall, for tractors Obviously, no where So very still more we hand-forged I strong demand horsepower remains on little strong. bit managing that’s cash

Nicole Deblase

that Thanks. And for follow-up still price be should is pricing I suspect a carryover the expectation again you perspective year, correct? is just that positive guys, Got it. strong pricing, on guess, really I then cost next And from for a what XXXX? margin into

Oddone Incisa

Again, quarters. we few on the have over price delivering last cost been

We expect fourth will increase with pricing the diligence pair pricing cost at and into in XXXX. quarter least maintain we to

Nicole Deblase

will Thanks. pass on. I it

Operator

question Equita. We from next will take Martino De Ambroggi our from

ahead. Your open. go Please line is

Martino De Ambroggi

everybody. Thank you. evening, Good morning. Good

if are sorry. on in it’s in not QX, XX% first peak The we again, very historical is AG to. the Plus prices, close

have So collecting mat cost I quarters you are at me three that be raw couple inflation quarter, if for am so able orders, on, but just will up if wrong not you second to row. visibility offset understand already and another I suppose, in so tell to to price least a that, of

First question.

confident a are but right maintain, there moving many do such you are -- for your any not I know I margins am too year. next assuming margins not year. guidance the to -- I next operating your based improve feel But that or provide comments, in second, on bullish? your parts, I too if message The you it’s know

Oddone Incisa

have we had But we built-in -- pricing Martino. increases. bullish, and definitely is price we again, It have

pricing we maintain are but able on into competing year. we how mean evolves. market it’s to -- -- be see are And are the to not levels we will -- then I market. facing -- expect we we So next a

and we a there have constant is working with We there. negotiation price bidders are

So we margin overall. margins are in again improving our will and committed improving -- we gross our

have our our working the prepared are and in better systems, -- -- remarks, systems. us will getting business to also we get We Kaizens our mentioned in our on production within Scott leaner have in production and the production disruptions still that our get to improvement issues source year. we of supply past had and of another for next in most that’s the facilities chain

Martino De Ambroggi

Okay. And another the capital, to generation question a cash could the the working quarter is on have be in net last what year. just of flavor of

excess if are to the because So narrow I what know else? range you in of that, or billion don’t $X if willing

Oddone Incisa

Yeah.

still or guiding do negative quarter. be we committing quarters, $X for billion in three So more in will that’s we inventory $X than And We the inventories to over manufacturing the still of fourth most we to production billion working the and from most so depletion. are stuff and to of from year come improvement sold think in it it of to we come completed and need excess are needs fourth quarter. be needs mainly our have be the to will in where capital that systems

Martino De Ambroggi

the quarter? the or you it supply still call, improvement previous in see in is to And struggling relevant last compared as chain was

Scott Wine

of trend the the in first and improvement into said better to remarks, improving. second It’s than continue was going quarter absolutely expect We XXXX. the that quarter, and quarter third we prepared

Martino De Ambroggi

you. Thank Okay.

Operator

next question Zakaria We will from Tami JPMorgan. from take our

go open. ahead. is line Your Please

Tami Zakaria

so for you taking much Thank morning. questions. Good Hi. my

for to say, if So are have on let’s trends. know AG actual down some give large what your color my orders didn’t your is would versus orders, limiting orders year-over-year. of can intention first you you back I you question you like? is and mentioned small and XX% orders limit AG, up going order limiting both, But been

Scott Wine

talk we tractors. for the Well, slowing about demand did low-horsepower

give and so there, not there wouldn’t there if the But -- tractors, to the I opened speculate in orders our team output. the I of demand. their books, own increase our get I remarks, need to inventory, improving cannot to lot that’s don’t is desire up North be. order as of they America are is for even prepared -- the the tight sentiment massive going in and when inventories are talk would we slowdown when think dealers we persist tractors that they America, Latin is about and we I situation in horsepower limiting obviously, can Americas, through dealers a is mentioned high So, most that a strong XXXX. demand horsepower often in be orders incredibly what Certainly, All the and actually in dealer both I are because to you high

Tami Zakaria

but Understood. That’s And positive cost very quarter price the Scott. was one. in like seems construction I helpful, the then segment seems if another like third probably It can quick for ask positive AG wasn’t price/cost yet.

will become So any that price/cost visibility into when segment positive? think you

Scott Wine

are price/cost and some they only bit we some experienced, experiencing With having the They impact. that of an more four that plants them issues more in the of operating, quarter. have the quarter. of just an labor are was positive Construction of a in caused pressure No. impact

Tami Zakaria

it. Got

congrats you so excellent an Perfect. quarter. on and Okay. Thank much

Scott Wine

you. Thank

Operator

next our Oppenheimer. take Owen question will Kristen from We from

is go Please line ahead. open. Your

Kristen Owen

taking Raven I then the Hi. you of back that some come Day. to your is to new tracking? Good you some what business can are and you question. to Tech expansion for of how introductions. the morning. offerings on extent comment, But around international the that were of elaborate willing those the Thank get to the comments ahead wanted too Not of far new to

Scott Wine

the long Farm part But I a with them of spreader introduced We forget, family. we talked obviously, pleased But at we have mean, have that Raven really, about don’t the as Progress. we been working to are incredibly time.

our take that reach to they to and they integrated time. technology they capabilities platform. technologies spread for it now So have able that part, extensive are that ability we product sprayer just are across significantly have make But enhancing and an better been some the our

as One plug-and-play, and but across talk impacting wouldn’t The little And way are is the of many really reasonably our autonomy over they Raven product categories our that well, but got than of bit that excited rest with and they with the we challenges bridge we that an with are we time. where things probably and we talked are Raven really done the to about are to -- chain going efficient expansion about I it quite into say, elevated had is into other business. a game. supply more are, the describe work our would Europe things autonomy I

weren’t sales now access them distribution. would greater through we supply are our have but constrained the We have in they Europe if helping certainly, they chain given

Kristen Owen

noticed and the really in And moderated outlook That’s volume of tractor. Europe particularly, helpful. for industry some year the full then America North for I

have some book talked you trends, how lot function of that wondering much into that a volume the but much book? that am push really of XXXX are is I versus You a moderation just seeing truncated how about of order order

Oddone Incisa

we about Well, an now volume, we that’s issue. so talking are overall -- industry industry are showing

expect as low demand -- still about -- strong for demand, is in think strong to but some tractor talked Continental strong the demand. I horsepower Europe can America, remains extensively Scott horsepower very we in reduction you we combines Europe is year. the to we by imagine. Ukraine North demand But very in have tractor, have have expect large affected

horsepower tractor most So important say, with strong the for of the the demand low North America, we see would in I exception markets us. overall still in

Kristen Owen

Great. Thank you.

Operator

from from question Michael America. next our Feniger take of Bank will We

ahead. is open. line go Your Please

Michael Feniger

deck question. wasn’t the my Form in you a that XX-Q in In priorities transition slide slide deck, including of QX. guys, filing Yeah. Thank for and XX-K list you, the taking the

what cons Just are Milan? be should are with You you with clearly dual the the we listing that guys how about operating as well. evolving? And think and thinking about just pros around should we

your are You lagging peers.

how trading that viewing of is are a am curious out is needs flesh listing you at I if a kind to big You if kind there just meeting management discount. of that curious Board dual review just dynamic? and or occur, that

Oddone Incisa

reporting first. Well, let question me the take

starting the So we reporting quarter are under this U.S. in

Forbes.

are comparable Clearly, and we compared particular, and also a construction peers. got of in request is in to the peers with we are the with, we America. more analysts more to be Iveco, this think I American comparable North our but some and North need many the be that after listed spin-off peers, of AG investors from

So that’s the format, that the disclosures into the peers have. timing to even of and our that direction effort get an getting

Scott Wine

meeting it. and if step in do we Board right just I most filing review the it’s that I to direction that I those And the topics two listing more it to the we for be remarks, way would that we we we vocal as Yeah. this a are make the dual something And efficient certainly the been will -- decision learn evaluating, discussing what’s are know, with do we is several I We right evaluating week. we are it. the on And of last that are the I we -- matter, think, a just had transition been, quarters said in SEC is that and the fairly and us prepared to think evaluating last have have as and We had part over don’t our Board. a forthcoming way the topic. and of with

Michael Feniger

going generate cash appreciate free guys in billion are And I you $X to flow. Scott. that,

relative of you. You you months how would of capital free be with kind in view you cash debt trades the XX think close the stock priorities do priorities? discount are looking other where so. flow? your that we net How your right now, peers with to at you relative that that allocation balance with other How to to Thank your or should

Scott Wine

we allocation capital think through walk priorities I and have Oddone consistent. mean, I pretty Well, been

profitable first are we going for to growth to The future is the company. drive dollar spend

We CapEx R&D. in and lot investing a are

those to do top ultimately, margin priority. really share is continue and and investments will through that, market the driving expansion We

on said, when to as are it have we I relates we intrinsic value, not own our trading below buying go good to but stock big going we -- investment. our spree, have have we demonstrated, think a said and we As a acquisition are is and

to to debt good maintain We a ratings. have leaned our we into like that. be and dividend We like player

on to all a of you diligent lot But we you bet we to we do how in try it. remarks, choice business in So a generate, that we can be cash us we allows I those, most model flow. to continue balance do gives the will important that. and your said generate our of It us how think, thing, allocate

Michael Feniger

you. Thank

Operator

Evercore take will We our from next Raso ISI. David from question

ahead. go open. Your line is Please

David Raso

your of time. Hi. you for the clarify, you just said for year you Can midpoint. think, I Thank EPS $X.XX

especially margin all-in mean, sequentially, you year-to-date, I doing the $X.XX it’s and down are or the number, if $X.XX, because the For quarter, it’s lot a either fourth $X.XX the $X.XX. but $X.XX or year-to-date seems one on the implication the the either

you $X.XX that you is for EPS, what year-to-date just are can clarify $X.XX? or So it using $X.XX,

Oddone Incisa

Yeah. That’s EPS, adjusted the Dave.

I believe… is So the it $X.XX

David Raso

$X… Yeah. have I

Oddone Incisa

so… but …$X.XX,

David Raso

fourth So $X.XX revenue margins it I I the like looks the with Is to in you from revenues down, $XXX-ish are up, quarter revenues through I like something accurate? am X.X%, sequentially, said just say, to or to price/cost you like the million trying million up trying EBIT $XXX just but and am for trying imply think $XXX at up million. another quarter mean, that earnings here. way, have fourth almost

Oddone Incisa

No. It’s not.

David Raso

X.X% margins?

Oddone Incisa

not. It’s not. It’s

David Raso

something about… there Is

Oddone Incisa

Yeah.

will margins… We have

David Raso

tax have will was we … high... rate

Oddone Incisa

the in had reasonably the margins in quarter. … fourth quarter than we the year last fourth higher

rate So the of is higher seen in about have EPS, math the something adjusted that’s tax probably there important. that also but so, -- this you there is talking is quarter. course, But

the So quarter to expect affect tax-rate well. next as

David Raso

And actually…

Oddone Incisa

can you we through want, you if And details… walk the

David Raso

Yeah.

Oddone Incisa

Yeah. offline. …

David Raso

up company a AG I The pricing quarters cost think reason there slow be, that your we trying over third get quarter? is gains ago you see to was quarter? me cost. am am Do pretty I The be in that through as if a you right? think the regardless quarter margin pricing than assumption XX%. okay. price/cost where a may That That’s starting to they couple into about for pricing constructive, was XXXX. let’s bps Do year to here see the the on asking is were as for less year-over-year and is was I year-over-year. the price/cost It stronger XXXX, XXX see quarters, basis about next into am to year-over-year getting mean I of, going I roll the peak, correct am price/cost, assume we say, on starting trying the sense if from to spread wrong. but price/cost you over a just the a get little trying just improvement bit I whole this versus

Oddone Incisa

credit look problems. Yeah. the fighting also all we itself transportation, few we incredible be and try cost get of to we as price-to-price, pricing with we it expect coming year expect pricing. at Dave, in manage are over what raw coming than right, we get from I last was will to still alone, and right? the to higher fold at at cost If pricing still and and have and from quarter, it look the coming still We this quarters, these costs last from to production only sales material, well. increasing we fourth We continue

embedded it’s pricing walk We have there, in not the in but park. a

Scott Wine

the do Yeah. central yet But of expect, it’s bring obviously, despite many the we world under not control, under inflation, to banks around it trying control.

our supply his re-baseline at want you what that bit. just to able doing a be to out to good they levels. take, perhaps have we to our chains, costs do really lean, to Derek come to the are cost structure go oversight How are cost compared driving own down to But but as do cost coming logistics to is thought not of make driving and process aggressive a sure pandemic. down. get the factories ripping know, we it’s those on and a we do costs own a cost work waiting and doing, chain supply almost little looking that out? shout And added So, team through to going manage pre-pandemic it’s really what is out And I see we of lot Nielsen give

David Raso

relationship I get real trying of quarter implying eyebrow it price/cost for large already. sure that. me. order an least No. I the Thank sense just biggest am we the appreciate you order get that are the because benefit raises we quick, sort trying AG. that. to about And -- from of you. expand book When to do I window? then you books understand expect That’s to just what make did fourth AG about the a am at

Scott Wine

Next year.

Operator

will take our [Operator from Instructions] question Nicholas Green We Bernstein. next from

go ahead. Your line is open. Please

Nicholas Green

guidance. Thank identify Green something you it’s part Thanks -- I morning. please? Oddone, return it’s you. your capital you quite likely perhaps I amount Can capital? this it’s to inventory That’s to are factors may that prevent the net taking talk expecting, it’s us that control, working to to of collect Bernstein. you that much able Good for through in QX? Nick first of Hey. you to inflow any mentioned, question. within am being that’s You my the working think QX how trying would understand from not you. effectively one. ability items risk the you Can monetize like Thank of your in to

Oddone Incisa

equipment semiconductor, well. what main availability that plants factor fleet, in say of in to availability complete of flag is risk I’d the still is as we the labor red able on some call of and parts, availability our being or depends not of some cases

Nicholas Green

all guidance. mean you comfortable those specifically, are you like with are it comfortable I mean, generically, other, because the I of giving the But sounds items,

can the of are book, order existing be what working because you visibility you delivering? of capital? to monetize going to your are So be maybe expecting of you I will comfortable that see able fairly Are guess that you you amount

Scott Wine

we do. all It got with really but shipped with to and have with manage parts we plants at much have put to but guidance, the Literally, in very that to it we well. be work this that it, have books. has do execute it’s -- your team our units confidence the within it. see being it Because get process, quarter we the from to has if able suppliers, it has mind, do complete could spreadsheet to in Yeah. blow would to order our you get able everything and nothing our the to It them that

Nicholas Green

Okay.

come not year am still you I results. full how think us I will it much to give clear when

today. made not inventory blamed If you on could it happen have that of amount factors we certain to will be talked that incoming, about

you are them. So, like but it considering sounds

Scott Wine

we fleet about wheel we our about talk customer fleet meet inventory, are to unit what what’s everything talking to in we those When Let the expect we Those there have to combines, those, and portfolio we these come we suppliers embedded our missing be got when missing line-of-sight we and those our inventory. that’s in loaders, is factories ship are because that is but in, a me run complete demand, components, when tractors, can’t guidance. continue components. therefore, complete clear,

Nicholas Green

on very That’s Thank construction clear. Okay. then the question the second And you. margins.

It had past. the division went operating deleverage of in number time a volumes each did the this down. margin So past, negative suffer of in occasions

you would the looking forward, to levels mentioned, consequences as the at given But activity probably well the are of expect suffering activities. drop we strike moment. construction you some As of

us operating through what steps correctly avoid the you So cost for can deleverage ensure slowdown construction that to sized can you a division of round? time talk base are we so hopefully is taking this the

Scott Wine

system profitable future doing Well, they impressive. business that the is markets. the are do market, said so set positive and got nice when I and They recognize, what in stay looking Stefano Yeah. are strong growth will in it. this The the even -- And are we modeling happens seeing they -- it’s work this is down impressive. to it and build and in see. North model I especially at It’s down American a those and I trying are his team South to in the slows platform that repeat Pampalone for that really America now to right growth we growth they

those a from allocating/shifting have And of benefit little They the the efficiently. technology years. our lineup are are and will investing we of up last is sense. the they is portfolio, few more are plants got a we into it lot product running fortunately, over improving have time bit Now, that we done makes I going cleaning improving, where They forward. think production insertion but the in

Nicholas Green

lower being been hadn’t if -- that will large there? the quarter us of Are this margin suggest to hint does So that Industrial the a action to margin strike the a able extent give to taken? due that you

Scott Wine

of are doing sense. where is looking Yeah. makes Well, what part it we

products deliver. transition impacted our to we So the to that in decision did quarter the some and to make ability other plants

transition to So, current improvement satisfied next to margins, but quarter. obviously, don’t, But we over of down a the several with quarters. the no, it the no, a during we because obviously, our not path are clear was production bit no, very we decision see

Nicholas Green

you. Thank turn I Okay. will over. it

Operator

There Thank you on are joining today further questions line. the call. everyone no for

You may now disconnect.

CNH Industrial (CNH) 8 Nov 222022 Q3 Earnings call transcript